The Road to Serfdom, 70 years on

On 10 March 1944 Friedrich Hayekʼs famed book, The Road to Serfdom, was published in England by Routledge Press, with an initial print run of 2,000 copies in a period of wartime paper rationing. In July of that year, Dymockʼs published the book in Australia.

What started as a somewhat inconspicuous memorandum to Sir William Beveridge, of the London School of Economics, in 1931 became an international best‑seller in book form almost fifteen years later. Today, it is no overstatement to suggest that The Road to Serfdom takes its right of place as an iconic treatise from the past century, but retains an enduring value concerning the political and social consequences of central planning over economic relationships.

To mark the seventieth anniversary of the publication of The Road to Serfdom, I wrote an opinion piece for the ABC Drum website (a copy can be found here). An extract of the piece is as follows:

When Hayek wrote the first edition of The Road to Serfdom in 1944, … central planning was equated with socialistic political attempts to comprehensively, and directly, control production processes, supplanting markets as the prime means of economic organisation.

For Hayek, this manifestation of socialism was a grave threat because:

ʻOur freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes, we can turn to another. But if we face a monopolist we are at his mercy. And an authority directing the whole economic system would be the most powerful monopolist imaginable.ʼ

Importantly, Hayek also pointed out that central planning socialism cannot distil the economic knowledge needed to ensure that resources are allocated to their highest valued uses.

Hayek advised it is possible for nations to avoid central economic planning and political totalitarianism, and to even bring themselves back from the brink of socialism, but he equally warned of severe consequences from the dalliance with interventionism in the Western world.

As he indicated in the preface to the 1956 edition of The Road to Serfdom:

ʻThe most important change which extensive government control produces is a psychological change, an alteration in the character of the people.ʼ

Nowhere is this problem more apparent than in the area of government welfare policy.

Before I continue, I note the passing of this important historical moment in classical liberal philosophy had not gone unnoticed by others. Richard Ebeling (whose work is always worth reading) wrote a terrific summary of the several themes of Hayekʼs classic work, and the anniversary was noted around the online traps, as it were, by several bloggers and some classical liberals on twitter.

Now, at the time of writing this blog post there were 354 responses on the ABC Drum website (you can see the fireworks here), and by my rough estimate 99 per cent of those were negative toward the piece I wrote about The Road to Serfdom.

As a rough guess, about 60 per cent of the responses were the usual ʻwell, you would expect Julie Novak to write in favour of Hayek, because she is paid to do so.ʼ

These claims donʼt deserve much attention, but for the implicit belief expressed here that nobody would publicly favour individual liberties and rights, free markets and civil society, and strictly limited government ‑ unless they were paid to do so. That these views are held by some is disturbing, but not altogether surprising in a world in which sentiments run decidedly in favour of the many socialistic deprivations of freedom, across all its dimensions.

I would venture to say another 20 per cent of the responses received merely repeated my arguments back at me, illustrating a significant tendency to misread or not to comprehend what was written.

It seemed the most popular argument I expressed, and duly recited back to me, was the idea that the nature of government intervention (or at least the aspiration to intervene) has shifted from outright state ownership of the means of production, to redistribution of surpluses generated by the private sector. But I did already say that!

The other 19 per cent disputed my suggestion that the rise of the governmental welfare state represents a ʻroad to serfdom,ʼ whose pace of growth needs to be checked (in my view, reversed) in what would be a great correction to the prevailing age of entitlement.

There is plenty of discussion within the economics literature, both from conceptual and empirical perspectives, which suggest that a larger welfare state would tend to diminish economic performance, all other things equal, on several fronts.

Labour supply responses are curtailed, thanks to the opportunities to eschew work and opt for a life of dependency; economic resources are wasted as some people alter their circumstances, or lobby government, to obtain government payment; the bureaucratic‑political class increasingly manipulate welfare subsidy settings to prescribe, and even proscribe, individual behaviours; and heavy tax burdens restrain private economic activity including entrepreneurship and innovation.

I will also indicate that I am, by far, not the only one who conceives that the continuing growth of the welfare state represents a threat to individual liberty, on an even broader scale.

A far more eloquent person than I, Theodore Dalrymple, characterised the welfare state as a big step towards the road to serfdom, in which private property and competitive markets (in heavily hampered form) coincide with a tax‑subsidy churn regime leaving people a diminished scope to make real, consequential life decisions for themselves.

To the remaining one per cent (!) who responded positively to my piece, I cannot do much more than to say ʻthank you,ʼ and to say I fervently hope that some of those who were critical had subsequently picked up a copy of The Road to Serfdom and are duly checking, and in fact revising, their socialistic prejudices.

16 Responses to The Road to Serfdom, 70 years on

Julie,
Read this excellent story on ABC online earlier today. I thought it was a good piece and left some comments there.
The comments section is very interesting. It amazes me how naive people are about economics. Some readers actually believe that Hayek is the cause of US problems, when we both know that manipulation of everything over there is the cause.

Gordon Tullock used Sweden as an example to say that the basic problem with The Road to Serfdom is “that it offered predictions which turned out to be false. The steady advance of government in places such as Sweden has not led to any loss of non-economic freedoms.”
But how can democratic socialism work if the right-wing parties will win office in 6, 9, or 12 years’ time and undo everything? Too many parties of the Left assumed that they are the face of the future, rather than just another political party that will hold power as often as not
Was democratic socialism good for democratic consolidations in the post-colonial third world? Was that not a better hunting ground for Hayek’s fears?
Would Singapore be an example of central planning and state ownership leading to serfdom and a one-party state?
The state controls and owns firms that comprise at least 60% of the GDP through government entities. The vast majority (more than 80%) of Singaporeans live in public housing;
Although initially styling itself an anti-Communist and Social Democratic, the People Action Party (PAP) was expelled from the Socialist International in 1976 because it suppressed dissent and jailed opposition leaders. Hayek would be vindicated?!
The 2010 index of economic says that Singapore is a nominally democratic state that has been ruled by the PAP since the country became independent in 1965, and that certain rights, such as freedom of assembly and freedom of speech, remain restricted
The freedom house 2010 country report notes that Singapore is not an electoral democracy despite elections free of irregularities and mentions that all domestic newspapers, radio stations, and television channels are owned by government-linked companies, which limits free speech. The PAP has used the Government’s extensive powers to place formidable obstacles in the path of political opponents.
The people and parties, often with a socialist hew, who won the election after the autocrat or the colonial government left town are not always all that keen to give up the reins of power.
Remember Huntington’s Two Turnover Test: when a nation moves from an emergent to a stable democracy, it must undergo two democratic and peaceful turnovers of ruling parties. After an emerging democracy’s first turnover, the new administration often reverts to authoritarian rule. Russia under Yeltsin and Putin.

I’ve just been over at the Left”s Drum responding to done of your critics.

The wall to wall infantile Leftism is a sight to behold. Reminds me of my days in student politics when the insular Left ran the student rag with all of its mind numbing tedium. Seems like all those uni posers have graduated and moved on to the Left’s Drum.

Yet another good reason to privatise the ABC and SBS. Let the Left fund it’s own propaganda.

Gordon Tullock used Sweden as an example to say that the basic problem with The Road to Serfdom is “that it offered predictions which turned out to be false. The steady advance of government in places such as Sweden has not led to any loss of non-economic freedoms.”

The Road to Serfdom isn’t Hayek’s best work and some of its prognosis have not eventuated. That said, much of his underlying analysis is sound and very useful in understanding the rise of the Nanny State.

Hayek’s warning, by a man who was a leading critic of the making of detailed predictions, was against a background where democracy was still young and insecure in Europe and peacetime democratic governments were, up until then, no much bigger than a post office and a military. The big governments of his day were not democratic.

The period that managed to combine a degree of state ownership and control of the economy that would be unthinkable today with a free and more diverse media and political pluralism than exists today under the free-market consensus was mostly under Tory rule (1951 to 1964, 1970 to 1974) with the Labor governments (1964-1970, and 1974 to 1979) holding on with a margin of a few seats.

Then there was the Menzies era in Australia with liberal party rule from 1949 to 1972; and then 1975 to 1983. Much the same in NZ. The Christian democrats usually ran both Italy and Germany in coalitions, as I recall, up until the late 1960 or early 1970s. Gaullist France? (The LDP in Japan)?

When looking back longingly at the mixed economies of 1950s and 1960s, people often forget who won elections much of the time back then.

That is where Hayek got it wrong. The left-wing parties were not the face of the future.

Power rotated in Schumpeterian sense. Governments were voted out when they disappointed voters with the replacement not necessarily having very different policies. The right-wing parties won many western European elections by that well-proven old trick of being slightly to the right of the left-wing parties.

I think the commenters got it pretty right on the Drum. Kevin Rudd gave a devastating speech a few years ago decrying the silliness of Hayek, whose work has been discredited in economic circles for decades now.

Like all science, economics has progressed beyond the painful theorising of the immediate post-war years. Move on, Julie.

These claims donʼt deserve much attention, but for the implicit belief expressed here that nobody would publicly favour individual liberties and rights, free markets and civil society, and strictly limited government ‑ unless they were paid to do so. That these views are held by some is disturbing, but not altogether surprising in a world in which sentiments run decidedly in favour of the many socialistic deprivations of freedom, across all its dimensions.

And yet you give them enough attention to feature them in your piece. You may find it disturbing that people hold these views, but 300+ people bothered to comment and disagree with you compared to eight or nine here who don’t. Maybe the 99% of the 300+ have a point.

But how can democratic socialism work if the right-wing parties will win office in 6, 9, or 12 years’ time and undo everything?

What have right wing parties really unwound though that is of any substance. You can point to this or that, but the one true measure is the % of government expenditure to GDP. Both Thatcher and Reagan just slowed, not stopped the growth path and for that they are referred to as heroes on the right and monsters by the left.

When I first discovered libertarianism many years ago, I went searching for books to further explore my political and social views. I came across Hayek’s ‘Road to Serfdom’ and ‘The Constitution of Liberty’, his big two books, and Hayek was generally regarded as ‘the man’.

Let me tell you, Hayek makes almost every concession to statism, the welfare state and government economic interventions in ‘certain circumstances’. Because what constitutes those certain circumstances are always subjective, the end result means that interventionism potentially becomes unlimited. There is no objective rigor or sound logical basis underlying his theories.

Hayek is a confused, contradictory and muddled thinker. Some have said this is precisely why he is always held up by the left as the prime exponent of libertarianism and free markets, simply because he is so easy to refute.

I would skip this book and read something like
‘For A New Liberty’ by Murray Rothbard
if you want to read an intro book on the concept of Liberty.

You’re not very bright, Alf. Argumentum ad populum may be how you leftists operate but normal people don’t. Come to think of it, neither did Einstein.

Indeed, and sometimes the few are spot on. But I’m not sure that the IPA’s fantasy world of unfettered free enterprise is a recipe for happiness for the many, and apparently quite a few people share that view.

Yohan, Richard Epstein wrote an essay in 1998 or so called Hayekian socialism.

Murray Rothbard reviewed the 1st half of the draft of Constitution of Liberty in 1958 as ”surprisingly and distressingly, an extremely bad, and, I would even say, evil book’. in 1960, he reviewed the final

as a tragic failure, despite the many pro- found passages scattered through the book, despite the wealth of references, and despite the isolated chapters that have much net value…’

Jim, yes good quote, I have recently read those critiques of Hayek, such as by Rothbard in the Volker papers. It now make total sense.

But over a decade ago, as someone inexperienced in libertarian political philosophy, I could not figure out why Hayek seemed like a soft socialist, and yet the left (and also the think tank IPA types) were claiming he was a radical individualist libertarian.

Buchanan and Congleton proposed a non-discriminatory democracy through the principle of generality:
1. If extended to any single industry, tariff or quota protection also be extended and on equal terms to all industries.
2. Tax structures would necessarily become more simple, since the same rate would have to apply across-the-board on all sources or uses of tax base. Flat rate or proportional taxes on all incomes would broadly meet the generality norm.
3. On the transfer side of the budget account, payments would have to be made in demogrants, equally available to all persons.

This is equivalent to Rawls’ veil of ignorance: choices must be without knowing where you lie in society so you make choices that are to the benefit of all.

In a nondiscriminatory democracy, choices are limited to those that benefit all.